Home BancShares (NYSE:HOMB) reported first-quarter financial results on Thursday. The transcript from the company’s first-quarter earnings call has been provided below.
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Summary
Home BancShares reported a strong first quarter of 2026, with a record book value per share and significant capital ratios, including CET1 at 16.7%.
The company successfully completed the merger with Mountain Commerce, although full integration savings are not expected until the end of the year.
Home BancShares ranked as the number two bank in the US over $10 billion by S&P Global for 2025.
A $110 million Texas credit was moved to non-performing status, but management is confident in resolving it without significant losses.
The company continues its stock repurchase program and remains active in the M&A market, focusing on opportunities in Florida and Tennessee.
Loan production was $917 million in Q1, with expectations for continued strong deposit growth despite some anticipated Q2 headwinds.
Home BancShares maintains a prudent credit approach, with criticized assets and early-stage past dues remaining stable.
Management expressed caution regarding inflation and potential interest rate increases, impacting loan and deposit strategies.
Full Transcript
OPERATOR
Greetings ladies and gentlemen. Welcome to the Home BancShares incorporated first quarter 2026 earnings call. The purpose of this call is to discuss the information and data provided in the quarterly earnings release issued after the market closed yesterday. The company presented will begin with prepared remarks, then entertain questions. Please note that if you would like to ask a question during the Q&A session, please press Star then one on your touchtone phone. If you decide you want to withdraw your question, please press Star then two to remove yourself from the list. The company has asked me to remind everyone to refer to their cautionary notes regarding the forward-looking statements. You will find this Note on page 3 of their Form 10K filed with the SEC in February 2026. At this time all participants are in listen only mode and this conference is being recorded. If you need operator assistance during the conference, please press Star then zero. It is now my pleasure to turn the call over to Donna Townsell, Director of Investor Relations.
Donna Townsell (Director of Investor Relations)
Thank you. Good afternoon and welcome to our first quarter conference call. With me for today’s discussion is our Chairman John Allison, Stephen Tipton, Chief Executive Officer of Centennial Bank, Kevin Hester, President and Chief Lending Officer Brian Davis, our Chief Financial Officer Chris Poulton, President of Central Choice Financial Group and Scott Walter of Shore Premier Finance. Our first quarter set a strong tone for 2026. Results demonstrate sound expense control, consistent operating performance and attractive returns including record setting metrics of book value per share of $22.15, tangible book value per share of $14.87 which is $1.72 per share increase year over year for 13% increase. By the way, CET1 ratio at 16.7%, leverage of 14.3% and Tier 1 capital of 16.7%. In today’s economic environment that is a meaningful accomplishment and our team is pleased to walk through the quarter’s results with you. Our opening remarks today will be from our Chairman John Allison.
John Allison (Chairman)
Thank you and welcome to Home BancShares’ first quarter 2026 earnings report to shareholders. Thank you for joining us today and I think the headline and the quotes pretty much summarize the first quarter. I want to thank our team for getting us off to a great start in 26. For those of you who are not already home based shareholders that are interested in a better understanding of home, I think it’s important that you look at the strength of the balance sheet. Couple that with the monthly and quarterly consistent level of performance over the last several years as primarily showcased by the last five quarters. The prior years reminded us of the highest interest rate cycle in the early 80s where then almost all banks struggled because of poor balance sheet management. And the same story has been even more visible today, that is lack of liquidity by investing into long term securities trying to stretch for yield. I’m proud to say Home didn’t suffer those problems during that time and was reporting record earnings while others were struggling. S and P Global just ranked Home’s performance for 2025 as number two of all banks in the US over $10 billion. We’re honored by this elite ranking by one of the world’s best and most respected experts. We were barely edged out for the number one position last year. Maybe we’ll get it this year. We’re happy to have completed the merger with our acquisition of Mountain Commerce and look forward to a successful combination. Due to the back office computer upgrade that was already in progress before Mountain Commerce, we will not be able to start converting Mountain Commerce until November. As a result, the maximum anticipated savings will not be realized until probably the end of 26. Once accomplished, we believe our new partners can soon begin helping us to continue the outstanding performance of Home BancShares that is known in the US and worldwide. Home is proud of our reputation. Always known as one of the strongest, safest, most conservative and best performing banks in the world. We’ll continue to try to make our shareholders proud and happy to be part of this outstanding company. We know who we work for and that is our shareholders. If you loan money we all know problems can and will arise from time to time. It has to be worked through. We haven’t. We had a $110 million Texas credit that we decided to non perform this quarter. This is the same credit we’ve been talking about for a year and a half or two years. The credit remained current until this quarter. It has been one we’ve been monitoring intensely for about eight months. We’ve entered into a short term forbearance agreement with multiple deadlines and requirements. We are advised by legal counsel not to discuss. In that I can say we’re either going to get paid off or we’ll liquidate the existing collateral. We do not anticipate any additional loss but if things were to result in some loss, Home BancShares’ strength puts us in a position to deal with whatever comes because the conservative balance sheet we’re carrying right at $300 million in loan loss reserves, one of the highest reserve percentages in the world. Couple that with the strong Couple the strong reserves with a consistent quarterly pre tax pre provision net revenue of 100 to 150 to 160 million and we’re confident of our ability with whatever happens and do not expect this loan to have any major impact on earnings, if any at all. It is our belief that there is more sufficient assets and personal guarantees to properly resolve this issue. I’m pleased with the results comparing Q1 to Q1. Last year the first quarter only had 90 days and we had two extra. If we’d had the two extra days in the normal quarter plus just a little touch of wind I think I said last year we had to wind our back two or three times. We had no wind this time this quarter we got zero. When Brian, you always come up with. When you didn’t come up with any juice this time. Well, we did have that FDIC assessment but we got a reduction. Well we had a write off to balance that off. So that’s evident in the non interest income category being the lowest since December of 24. Maybe next quarter will be the best on M&A. I want to congratulate the administration and the Fed along with the Arkansas State Bank Department for the fast approval process. The speed of the approval may possibly give time for another deal this year. We’re certainly in the market and looking for another good fit. We continue to repurchase stock as the volatility of uncertain world as a war kind of makes it uncertain had provided opportunity for us to purchase more recently. That is before we were in a blackout period. However, we did file our normal 10B5 for this time. If the volatility continues we will be very active on the repurchase side. I think we have essentially bought back if not all of the shares issued in the Happy bank transaction and will endeavor to do the same for Mountain Commerce bank transaction. Particularly if volatility continues to create opportunities. The repurchases will take some time but once MC is converted on our system the additional share reduction should have a positive impact on earnings. We’re being very careful on the loan side because the uncertainty of the war, the consumers business asset class and what this cycle might ultimately evolve into. The talking heads have all said rates are coming down but we have cautioned that there is possibly that possibly they will go back up before they come down. Inflation is not dead. Let me say that again. Inflation is not dead and as Jamie Dimon would say, that’s a major cockroach in the mix. The question is how high and how long do they remain high? It depends on how aggressive the Fed is going to be with the escalating interest rates to try to get a Handle on inflation. Remember the late 70s and the early 80s? 21%. It’s not going to be that high, but it has to be corral. Chris Pelton, who runs our New York office has a great sign. He said the year of the lender is followed by the year of the collector. I think. I think our early Texas experience confirms some of Chris’s statements. I think it’s a time to be very careful. The normal structure of some asset classes that worked in the past may not work today. It is our job to watch and hopefully recognize in advance these loans that we think may be infected with, as Jamie Dimon would say, cockroaches. You will hear from Chris Paulson today about his attitude on private credit and the changes made because of it. His call on private credit was outstanding. The good news market pricing on acquisition deals are more in line with the correct value and slowed the insane dilution, at least for a while. One of the CEOs that did a fairly flagrant. I use the term here, maybe it’s a Johnny word, dilutionary. It may have been delusionary. Actually, the trade was so silly. He did a trade some time back, came up to me at a bank conference and said, I’m here to get my butt chewed out. And I proceeded to do just that. Then I gave him a hug and we discussed the pros and cons and the impact and the damage done to long term loyal shareholders and agreed that dilution is not the friend of a shareholder. Enough said. With all the attention that diluted transactions are getting, maybe the publicity and management embarrassment has slowed the shareholder damage. At least I certainly hope so. I hope it’s finally the start of a sea change that forces management to do the right thing for the shareholders. Donna, great quarter. I’m pleased with the strong continuation of Holmes earnings. And again, I’m going to hand it back to you and let’s go. Since I teed up Chris, if you don’t mind, let’s go to Chris first and let him comment and carry forward. Then we’ll go to Stephen and Kevin and Brian and back to you to wrap up.
Donna Townsell (Director of Investor Relations)
Okay, sounds good. Thank you, Johnny. So up next, we have a report on CCFG from Chris Fulton.
Chris Poulton (President of CCFG)
All right, thank you, Donna. Today I’ll provide a brief update on Central Choice Financial Group’s first quarter and then, as Johnny said, we’ll share some perspectives on the private credit market. During Q1, we grew the portfolio to approximately $2.1 billion. This represents a roughly $60 million increase supported by $370 million in new loan production. Loan productions remain steady and this number is in line with prior year levels. Payoffs for the quarter total just under $200 million, which is also consistent with historical averages. We do expect slightly higher payoffs in Q2, so I do think our pipeline should allow us to replace those balances either this quarter or the next. Over the past several years, I’ve discussed declining balances in our corporate lending portfolio. This is an appropriate time maybe to provide some additional context and particularly in light of recent news around private credit. Central Choice Financial Group has long participated in the private corporate credit market. Our exposure has varied over time, but we’ve maintained a consistent presence and have long term experience in the space. Our private credit balances peaked at just under $500 million at the end of 2022 and today outstandings are $87 million. That’s a reduction of over 80% in the past three years. So why do we make the choice to reduce our private credit exposure? Well, beginning in 2023 we observed several trends that influence this decision. First, we saw new bank entrance. As some banks looked to reduce their reliance on commercial real estate, many chose to lend into the growing private credit space through participations in structured facilities. This led to broad yield compression across the private credit market and as often happens, some loosening of credit structures and underwriting standards. At the same time, we saw significant equity inflows from individual investors or retail investors into these sponsored investment vehicles. We’ve seen this movie a few times before and we haven’t always enjoyed the ending. We’ve maintained and we have historically maintained an intentional focus on the shorter duration positions, typically under three years, and as a result, we were able to actively exit credit facilities as they reached the end of their reinvestment period. In total, we exited eight corporate lending facilities through repayment during this time. Our remaining exposure is limited to a few facilities primarily within double A rated structures. Our attachment points approximately 58% of par value of the underlying loans which provides 40% sponsor equity support beneath our senior position. While market dislocation often creates opportunity, we believe it’s still early in the cycle and as a result we’re remaining cautious and at present are biased towards further reductions while continuing to monitor this closely. With that Don, I’ll turn it back to you.
Donna Townsell (Director of Investor Relations)
Thank you. That was a great call, Chris. Yeah, thank you for keeping your eye on the ball with private credit, Chris. Next we will hear a few words from Steven Tipton.
Stephen Tipton (Chief Executive Officer of Centennial Bank)
Thanks Donna. Chris, we appreciate your approach and discipline over the last 11 years with us as Johnny mentioned the first quarter of 2026 was a good start to the year with 118.2 million in net income, a 2.009% return on assets and 16.56% return on tangible common equity. Q1 2026 earnings were in line with the prior quarter despite two fewer days and were up $3 million or 2.6% from the first quarter of 2025. The reported net interest margin was 4.51%, down 10 basis points from Q4 as there was zero event income in Q1 2026 and up 7 basis points from the same period a year ago. The core margin having no event income was 4.51% versus 4.56% in Q4. The overall loan yield declined by 15 basis points to 7.08% while interest bearing deposit costs declined by 12 basis points to 2.35%. Total deposit costs were 1.83% in Q1 2026 and exited the quarter at 1.82%. Deposit balances increased $258 million, driven by all of our Florida regions. I would expect some headwinds in Q2 from tax payments, but we’re pleased to start the year strong. A highlight from the quarter was that non interest bearing balances grew by $126 million to almost $4 billion and now account for 22.5% of total deposits. As we typically see in Q1 2026, loan production softened coming off of a very strong fourth quarter, we had total loan production of $917 million with over half of that coming from the community bank footprint. Switching to Capital, we repurchased 507,000 shares of stock during the quarter for a total of $13.9 million. And as Johnny said, we will continue to be active with our share repurchase plan. Capital levels continue to build with common equity tier 1 capital ending at 16.7% and total risk based capital at 19 and a half percent. Lastly, we’re thrilled to have the Mountain Commerce employees, customers and shareholders on board and look forward to growing the Tennessee franchise for home. With that said, I’ll turn it back over to you Donna.
Donna Townsell (Director of Investor Relations)
Thank you Stephen. And to close out our prepared remarks, Kevin Hester has a lending report.
Kevin Hester (President and Chief Lending Officer)
Thanks Donna. Given our Strong showing in 2025, it could be easy to look at this quarter as boring. I think that shows the high bar that we’ve set for ourselves because any quarter that posts a return on assets of 2.09%, maintains solid asset quality and is an earnings beat over the same quarter a year ago is not an easy task. And should be inspiring. As I anticipated, last quarter ending loan balances dropped by a little over $50 million. But it happened very late in the quarter which resulted in average loan balances actually being up $174 million on a linked quarter basis. I see this downward trend continuing in the legacy bank into the second quarter because Q2 and Q3 projected payoffs very high. The Mountain Commerce Bank acquisition will however add over 1.4 billion in loans to the balance sheet. Based on my meetings with their lenders, I expect them to settle into our credit culture quickly and be accretive to loan production in short order. Johnny mentioned the non accrual of the Texas C&I credit that we’ve been wrestling with since 2024 and this increased non accrual balances significantly. But we have made recent progress with the executed forbearance agreement which leads us to a couple of ways to exit this credit during the next quarter or two. We are continuing to work with the small same set of issues that we’ve been dealing with for a while now. We took our medicine in 4Q24, but maximizing the exit sometimes takes more time and effort than you would like. It’s wonderful to have the level of capital and reserves that we have which allows you to work to maximize recovery on this limited set of problems. To that end, criticized assets were flat on a linked quarter basis and early stage past dues were below 50 basis points. Even with the large increase, the reserve coverage of non performing loans is still over 160%. As a point of reference, our loan loss Reserve would cover 15 years of our historical charge offs. If you use the last five years of average charge offs as a base. And that base includes the large 4Q24 Texas cleanup quarter. There’s nothing wrong with a workman like quarter where you meet expectations. I expect that a majority of banks would trade results with us. On that note, Donna, I’ll send it back to you.
Donna Townsell (Director of Investor Relations)
I expect you’re right. Kevin, thank you for that report. Before we go to Q&A, does anyone have any additional comments? My pleasure. And with that, I think we’ll go to live Q and A.
OPERATOR
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally. First question comes from Steven Scooten with Piper Sandler. Your line is open. Please go ahead.
Steven Scooten
Hey, good afternoon, everyone. Appreciate the time. I guess, Johnny, maybe if you can talk a little bit more about how the Progress is going to acquire even more assets on top of Mountain Commerce. I mean, like you said that your returns are phenomenal. So it just feels like you need to be able to multiply that on a larger balance sheet. So what have conversations been like and how aggressive would you be? Kind of within that. Would you ever think about loosening. This might be a crazy question for you, loosening the triple accretive mantra to
John Allison (Chairman)
get a deal done. Well, I think, folks, we hold pretty tight to our philosophy around here. You know, my fear is. My fear is they will say, well, he lied. You know he lied. I hear. I can hear the market saying, oh, he lied. He broke it. He diluted a deal. So I just don’t believe it. You know, I’m the largest individual shareholder and I’m not interested in diluting myself. So I think I hurt our shareholders when we do. You know, my philosophy on that. You know, we stretch as much as we can on a trade, but, you know, people have joined this company because we don’t dilute. And if I dilute it now, I think it would be kind of in. In as I’m getting older, in my career, I think people say, well, he got weak. He weak. Got weak and gave up. You know, so. But I haven’t as of yet. And I think it’s known when we tell it, when we’re talking to another perspective seller, we say we don’t dilute. You need to understand we’re not going to be your highest price. But if you’re going to sell a stock tomorrow, it doesn’t matter. You do a deal and the buyer dilutes the hell out of himself. If you sell a stock tomorrow, it doesn’t matter. Just get out and get going. But if you’re going to be going to ride with him for a while, it makes lots of sense not to do it and lose the deal. So if you want to hold the stock and keep it for a period of time, I think our buyers appreciate the fact over the years that we haven’t diluted. So I know there’s another deal out there right now that they’re bidding up on, but I’m not going to bid up on it. You know, we’ll bid it to the maximum we can bid it, and then if we don’t get it, we don’t get it. You know, a lot of it depends on the seller, what the seller wants to do. They want to stay, they want to be part of it, or they want to go to the house. So I think that. That if they want to go to the house, just get the biggest, best price and sell the stock tomorrow, get gone. Otherwise, I think you want to be in it for a period of time. You need to have a good partner that’s not going to dilute you. I know I rambled a little bit, Steven, but anyway. No, that’s helpful.
Steven Scooten
That’s helpful. And just in terms of the pipeline conversation.
John Allison (Chairman)
It does. It does. And in terms of the pipeline of conversations, what does that. I mean, we haven’t seen as many deals here in the first part of the deal get announced. I mean, are sellers just kind of not interested because the environment’s pretty good, or is it just in the volatility in the stocks? What are you kind of seeing in terms of conversations? Well, there’s conversations going on I mean, not only with us, but there’s other conversations going on. And bankers have called us, hey, what about this and what about that? And I said, well, we’re not ready right now. Let us get Mountain Commerce, kind of get our arms around it and then we’ll be ready to go. But we’re having conversations. I mean, at a bank conference recently, we ran into a couple people and I said we ought to talk sometime. And they followed up. Since then, you know, just a conversation in a bar. I said, we have a visit. Don and I are sitting it one day. And I said, well, I’ll visit sometimes. And that brought about a banker, end of the deal. To talk to us about these two possible options. So I think the conversation is going on. I actually think that people are embarrassed to dilute the hell out of the shareholders right now. I think they’re embarrassed because they’ve all been called down for the dilution. And we see what’s happened to the market prices of these bank stocks. I mean we went from 22 and a half times projected earnings to 11 times earnings. Right. Or 10 and a half times earnings. So you know, where’d the money go in the bank stock? We just, we ran out. My contention is we ran all the good investors out, but we just beat them up and dilute repeatedly. So I want to get back to the old days where we’re 21 and a half times earnings and everybody was happy, got on the right track and everybody made lots of money.
Steven Scooten
I guess one other question I have is around, is around loan yields. There was like a pretty big move in the loan yields this quarter. I don’t know if you could give some color on how much of that was kind of core decline in loan yields or where the new loan yields are coming on at versus maybe how much of the NPA affected those reported loan yields. Quarter over quarter.
Stephen Tipton (Chief Executive Officer of Centennial Bank)
Hey Steven, this is Stephen. Yeah, so first on the impact from the non-accrual. We don’t have any of that in our margin for the quarter. Had we had it on the books, the impact was about 5 basis points to the loan yield and it was about four basis points to, to them. So you know, the 451 that we reported, you know, had it been on the books and on, on non Accrual or on accrual it would have been, we would have been 455 versus 456. So some insight there. You know some, some of the other decline in loan yields really just a function of, you know, variable rate resets from, from the Fed moves last year that, that occurred, you know, January 1st and other certain frequencies. So you know we would have been, if you normalize for the, for the non accrual we would have been down 10 or 11 basis points and kind of matched what, what occurred on the deposit side production yields. I think we averaged seven and a quarter, 7.25 for, for the first quarter of this year I think we were right at 6.99 or 7% in the community bank footprint. So you know, north of prime and getting our fair share.
Steven Scooten
Great. Appreciate all the color everyone. Thanks for the time.
Dave Rochester
Thanks David. Appreciate you. We now turn to Dave Rochester with Cancer Fitzgerald. Your line is open. Please go ahead. Hey, good afternoon guys. I just wanted to talk about the loan trend real quick. It sounded like you mentioned pay down activity being a little bit elevated, possibly in 2Q and 3Q. Was just wondering how you guys are thinking about the organic loan trend. I know you got the deal closed this quarter so that’ll bump things up a bit. Just trying to understand the underlying organic trend there and then what part of the book are you seeing those pay downs in? Is it kind of more of the same? Is it anything new and is there any difference across the different geographic regions that you have? Thanks.
Kevin Hester (President and Chief Lending Officer)
Hey Dave, this is Kevin. I’ll answer that. It’s going to be a little bit of a long answer because I’m going to give you some color on how we do the pipeline process. Our pipeline process is probably more, we have more visibility into the payoffs than we do the new loans that are coming on. We know because of CCFG’s portfolio being, you know, a two to three year turn. And a lot of what we’re doing on the large side is construction deals and we know when those are finishing. So we probably have a four to six month lead time on a payoff where we might have 30 to 45 days to put it on a pipeline for a new credit because we don’t put new credits on the pipeline until they’re fully approved. And for Chris’s group CCFG, they may close it in 15, no longer than 30 days. And in the community bank footprint might take 45, but it’s probably closer to 30. So I would say our pipeline process is more highly skewed towards knowing our payoffs. That said, we do see second and third quarter payoffs being higher than they have been the last couple of quarters. Will we have some production that will offset that? It’s possible, but it’s going to come in in the next 45 to 90 days and it’s not on our pipeline yet because it hasn’t gotten fully approved. Second piece of that is that Mountain Commerce Bank is not yet in our pipeline process. So I really don’t have a good feel for what they might contribute in second and third quarter. I’ll know that probably in the next week to two weeks. I’ll have a good handle on that. So the short answer is it feels a little soft second quarter and could we outrun it? We could, but we’re going to have to get the production in here and get it, get it on the books.
Dave Rochester
Okay, great.
John Allison (Chairman)
Appreciate all the detail there. Oh yeah, go ahead. Sorry Johnny. Seemed like when we forecast big payoffs we have loan growth and when we forecast loan growth we have big payoffs. So you know, you’ve heard my comments. I catch the ditch. You think he got him and it gets loose. So as Kevin said, we never know what our customers are doing out there. I mean we never know. We got, we got a lot of big projects coming on stream that were funded up over a period of time. But you just never know. I mean another loan, I talked to one of our big customers, FBO business. He said I bought another FBO and I said good, that’s about a 15 million dollar loan. So you just never know. I didn’t know he was working on another one. So that’s good and bad. But. And I can tell you that deal’s
Kevin Hester (President and Chief Lending Officer)
not on the pipeline. I’m looking at it. That deal’s not on the pipeline. That’s the point. We don’t have as good a visibility into the to the new loans as the Runway is not as long as it is to the payoff.
Dave Rochester
Yeah. Yep, makes sense. Appreciate that. Maybe just switching to the margin. What do you guys think is going to be the rough margin impact from the close of the deal? And then if we don’t get any more rate cuts or rate hikes or whatever, if we have a stable fed funds going through the end of the year, how do you think that margin kind of trends from there after this 2q change from the deal?
Stephen Tipton (Chief Executive Officer of Centennial Bank)
Hey Dave, this is Stephen. So we’re still in the process of finalizing the purchase accounting marks. I do expect, you know, a little pressure on on the margin. Obviously it’s added it to net income and EPS, but expect a little pressure at least initially on, on the margin. You know, I talked earlier about where we landed for the, for the quarter at 451 and how you think about the non accrual. We were at 449 for March, so you know, still kind of fairly in line with, with where we were for the quarter and you know, maybe, maybe it ticks down slightly with Mountain Commerce Bank and then we hope to build on it from there. So he talked to Bill Scholl today and they, you know, their story over the last year or so has been the ability to reprice deposits, you know, at maturity as they come through here. And that’s, you know, appears to be, you know, what’s taking place over the next 45 days. And really over the course of the year as we’re able to some of the wholesale deposits either reprice or go away.
Dave Rochester
Yeah, okay, appreciate that. Maybe one last one. Just back on M and A. I know you’re open to deals in all your markets, but was just curious if you’re prioritizing any of those markets now with Tennessee in the mix, is there any focus, specific focus in any particular markets?
John Allison (Chairman)
Always Florida and, and always Florida and always and now Tennessee. So. Okay, we would entertain those markets.
Dave Rochester
Sounds good. Thanks again. Appreciate it. Yeah, thank you.
OPERATOR
We now turn to Brett Rabitan with Stone X. Your line is open. Please go ahead.
Brett Rabitan
Hey, good afternoon everyone. Thank you. Wanted to start, wanted to start on expenses and you guys managed to keep expense growth pretty limited last year, like 3% growth. And I know Mountain Commerce will create a little bit of noise but you know, was just wondering if there’s anything that you guys grant spend money on either as a result of that deal or just as you’re getting bigger, you know and then just any, any thoughts on maybe core growth this year relative to 25?
Stephen Tipton (Chief Executive Officer of Centennial Bank)
Hey Brett, this is Stephen. You know, core expenses were about 115 for the quarter. We’ll have some normal, you know, raises throughout the year just with merit increases, you know, contracts here and there. But that’s a decent pace today. You know, Mountain Commerce probably adds seven, seven and a half million a quarter to that number right now until we get to the latter part of the year and get their conversion in and begin to recognize the majority of those cost saves. There’ll be some cost saves along the way throughout the year, but the majority will come, you know, middle of fourth quarter.
Brett Rabitan
Okay. And then Johnny, just thematically, you know, I know you’re interested In M and A. And you’ve. Historically, you got a term for people that hire lenders from other banks. But wanted to see in Tennessee, you know, there are markets in the Southeast where everyone’s talking more about disruption, you know, due to a big deal or two, and just wanted to see if you might let Bill hire some folks on the lender side in Tennessee or if that was still just not a part of the equation in terms of how you think about it.
John Allison (Chairman)
Well, that’s not the way I think about it, but Bill may think differently about it and we really haven’t. Really haven’t discussed it, but we’re headed over next week headed over next week to meet their customers and shareholders and have a little talk about Home bank shares and Mountain Commerce and the partnership together. So I’ll visit. I’ll catch up with you a little later, I think. See what Bill’s thoughts are on. I don’t know if he’s had any. Anybody run at him, Kevin, you know, if he’s had anybody looking for. You don’t know.
Kevin Hester (President and Chief Lending Officer)
I’m not aware of any teams that, that he’s talking to. Not saying it wouldn’t be out of, you know, out of the. The realm of possibility and in that Nashville or Knoxville market. But, you know, to Johnny’s point, it’s not. Been. Not been the way that we generally try to do that. But if it’s due to disruption, that’s a little different. Little different premise than just going in and taking away folks that are at a place that they’ve been happy at, you know, for some period of time. I get the disruption concept and there could be something there.
Brett Rabitan
But see, okay, and then if I could sneak in one last one just around the pipeline, you know, I understand that it’s easier to see the payoff activity coming versus, you know, the pipeline building, but just wanted to see if any of the pipeline, if you want to call it trepidation, you know, is just around any competitive pressures. It seems like some banks are being fairly more competitive here recently on rate. I know you guys are pretty strict on rate and, you know, is that is or is the competitive landscape having any impact on what you guys are looking to do in the back half of the year.
Kevin Hester (President and Chief Lending Officer)
Yeah, I mean, I think some markets are different, you know, are harder than others for that. And I think it is not the same players in every market. It’s different players in different markets. But there is. There is some rate pressure. There’s even some underwriting and structure pressure that people have given into A little bit over the course of 25 and early 26. So that’s always a challenge. We always have to fight that because we’re pretty consistent in what we do.
Brett Rabitan
Okay, fair enough. Preshow the color guys. Thank you.
OPERATOR
We now turn to Catherine Mela with kbw. Your line is open. Please go ahead.
Catherine Mela
Thanks. I had a follow up on just deposit costs. I know you mentioned the 182 exit deposit rate which was kind of similar to where you were for the average in the quarter. Just curious, as you think forward for the rest of the year, I mean if we don’t have any more rate cuts, do you feel like deposit cost will start to increase as we move through the year? Especially, you know, maybe once we get past second quarter and gross improves or how are you thinking about kind of incremental deposit costs coming on?
Stephen Tipton (Chief Executive Officer of Centennial Bank)
Thanks. Hi Kathryn, this is Stephen. I mean it’s certainly, you know, with Mountain Commerce Bank mentioned what they have coming, coming through the maturity pipeline and, and certainly expect theirs to come down on the legacy home portfolio. We have some deposits that are tied to the T-bill or short term T-bill 91 day T-bill which trickled up a little bit in the first quarter and kind of put some pressure on the other changes that we’re able to do. CDs will continue to mature that we’ll try to reprice down. So and I’m still optimistic that we can inch out a basis point or two as we go throughout the year. But I’ll couch all that with competition like Kevin talked about on the loan side. I mean we’re seeing, you’re still seeing banks offer 4% for CDs and 375 to 405 on money market. So we’ll defend our customer base both here and, and in Tennessee.
John Allison (Chairman)
So I’m beginning to think that 4% might be cheap if breaks do what I think they’re going to do. So. Looks silly when you see people doing out there. We’re seeing, I mean we’re still seeing some sixes too. So I mean you think about that, how ridiculous that looks it might turn out to be. We obviously hadn’t stopped inflation. Depends on what the administration does and how aggressive the, the Fed is. If they’re too aggressive, I mean if they have to be as aggressive to control inflation, it may take 200 basis points to stop it. And if they lower, lower significantly, I think that would be a huge mistake.
Catherine Mela
Johnny, you’ve been right on the rate trade. Yeah, and you’ve been right, I feel like on your, the way you’ve been looking at rates for the past couple of years. So is there anything that you’re doing in your balance sheet just to prepare for the risk of higher rates?
John Allison (Chairman)
Not really. We’re just careful with our pricing, that’s all. We’re just careful with our pricing. You know, I was upset with myself last cycle. I said what was going to happen and then I didn’t bet it, you know, and I was, I ran into a friend, he said, I heard you Johnny, and I bet it. I went out and bought $4 million worth of money cheap. And he said, I still got it. I said, good for you. He said, you said it because what you said. And I said, well, I didn’t bet it and I should have. And that is a good thought maybe to take a look at stretching out there a little bit. We, I mean this is almost, Kevin, it’s almost a ditto of the 70s and the 80s and you know, we got this war now and we’ve got oil and we know what that does. And we saw producer price index, what at 4%. That’s what they annualized, 4%. We haven’t seen those numbers in a while. It could get, it could get, could get a little crazy here a little bit. I just don’t, I don’t have the answer. I don’t have that answer yet. So hopefully it’ll come to us
Catherine Mela
and then my follow up. Is anything on the credit side that you’re seeing? I know, I appreciate that you don’t want to talk about the credit, the $92 million credit that moved to NPA this quarter until you get it resolved. But maybe just outside of that, are you seeing any other trends or any kind of weakness across the book to be aware of?
Kevin Hester (President and Chief Lending Officer)
No. I mean I said, you know, criticized assets which includes all of our olam and below. Those were flat quarter over quarter and early stage past dues are as low as they’ve been at below 50 basis points. So you know, we’re, as I said in the remarks, we’re working with the same set of issues that we’ve been working with for the last few quarters. And I think I said a couple of quarters ago that that small group might get worse before it gets better. And that’s what happens when you have to put it on non accrual and start working it out. So we’ve already taken what we believe is our maximum loss and we would expect to recover some to all that depending on the way it resolves and which path of resolution it goes. Through, but we at least have some talking about the larger credit now. We at least have a good visibility into how that happens and it could happen as early as this quarter or next, so we at least feel good about that. And it is the same set of problems. I’m not seeing anything, you know, of any materiality that, that we’re that concerned about. So it’s, I don’t, I don’t think we’ll lose any money on this deal. I, I like the guarantors, I like the assets. The assets in this are in demand assets. They’re not, not scrap assets. They’re real, real value assets. And actually the, the assets are being leased as we speak. So there, there’s, I think we, we had sold some of these assets in the past on a 70, 30 basis. We got 70% and the customer got 30 and we sold those assets. They paid down just perfectly. So assuming the rest of them bring the same value, we’re going to take 100% of the proceeds from, from this point forward. So. But you’ll, if we get the site, get the sale schedule. So I think I’m pretty happy with that deal. I don’t think we’ll have, I don’t think we’re going to have problems or any, if there’s any, if there’s any hole left in this deal. These people are, have honored everything they’ve ever said to us that they would do. And there’s a very wealthy family. So I think, I think we’ll be, I think we’ll be fine. I think they’re honorable people and we’ll maybe just $10 million left. They put them on a $10 million, 10 year note or something, you know, so whatever take. I think they’ll, I think they’ll honor the. One of the oil. Has the price in oil had any impact? Sorry, go ahead, Johnny.
Catherine Mela
No, no, no. Okay. All right, great. That’s all my questions. Thank you very much.
Kevin Hester (President and Chief Lending Officer)
It may help if anything, if anything, it might help, quite honestly. Yeah, well, that’s what I was thinking actually. So I was. But yeah, but I know you have to value the assets. Okay, that’s great. Thank you so much for the call. Appreciate it.
Catherine Mela
Yeah, thank you. Appreciate it.
OPERATOR
We now turn to Michael Rose with Raymond James. Your line is open. Please, go ahead.
Michael Rose
Hey, good afternoon, guys. Just, just two follow ups. First, just on the, on the large Texas loan, was there any interest reversal this quarter? And if so, like, do you have the math as to kind of what the impact on the margin might have been this quarter? Thank you.
Stephen Tipton (Chief Executive Officer of Centennial Bank)
Hey, Michael, this is Stephen. Yeah, so the 451 margin doesn’t have any, doesn’t have any accrual in that number. So it was about a million 6 impact for the quarter, which is about 5 basis points to the loan yield and about 4 basis points to NIM. So if we had had it on accrual for the whole quarter, you know, 451 would have been 455 compared to 456 last quarter. So that’s kind of the math around it.
Michael Rose
Okay. Really, really helpful. And then just as it relates to the scheduled payoffs that you guys have talked about, can you kind of quantify what the. At least with the scheduled payoffs and pay downs are kind of expected to be over the next quarter or two,
Kevin Hester (President and Chief Lending Officer)
They look to me like the second quarter looks like close to a billion dollars and third quarter could approach that. And those are both. That includes kind of abnormal pay downs and principal pay downs too. So that’s what you’d have to do And just for some context, payoffs in Q1 were about 650 million, but they were 950 million in Q4, you know, 750 to 800 million in the quarters prior to that. So that’s a big, sounds like a big number, but that’s, that’s what we run, you know, in that range. Quarter in and out, just depending on seasonality. And that doesn’t include mc. None of that. Even what I’m quoting doesn’t include mcb because they’re not in my pipeline yet. Got it. And then do you have a sense for. Are there any loans with MCB that you’ve identified that maybe don’t fit your standards, that you may kind of plan to run off over a period of time? Just trying to, you know, kind of appreciate the puts and takes on, on loan growth as we move forward. So I appreciate all the color. Thanks. No, I’m not aware of anything. And I looked at every loan that we looked at in due diligence. I don’t remember anything necessarily that I, that I would say that I would run off. I think, you know, we have a credit culture the way we look at things, and theirs is pretty close to ours. There may be a little bit higher leverage in some areas. We’ll work on that over time as we can. And they’re going to have opportunities with us that they haven’t had because they’ve not been willing to do much construction. So, you know, Any decisions we make to go a different direction than what they’ve been doing I think will be more than offset by the opportunities that they have to do things they haven’t done before. So I look at them as being a positive, as I said in my comments, pretty, pretty early. I would expect them to hit the ground running pretty early on. We’ve already had a couple of pipeline discussions over three or four credits. So as of last week.
John Allison (Chairman)
So I told Bill, I said, bill, nobody cares what you make this quarter. Water. I said, just, you just get ready for the future. If you got anything you need to write down, write it down, get rid of it, get it gone, get it out of here. So I think, I think we’re coming in with a pretty clean chip coming in the front door.
Michael Rose
All right. Appreciate all color, guys. Thanks. Thanks.
OPERATOR
We now turn to John Armstrong with rbc. Your line is open. Please go ahead.
John Armstrong
Okay, thanks. Good afternoon. Just a couple things to follow up on. Hey, Johnny, did you say in your prepared comments that you think deal pricing has moderated somewhat? Did I hear you correctly?
John Allison (Chairman)
Did I said that? Yield, deal pricing, deal pricing, acquisition, deal pricing? Oh, yeah, I think it’s. I think it’s lightened up a little bit. I don’t think it’s. I don’t, I don’t see the urgency out there that I did see. However people are talking, they’re continuing to talk and they’re continuing to want to do something and some of them want to do with, do it with home. So. I think it’s out there. It’s just a matter if we’re ready to do that. Right. It’s just a matter of we’re ready to make the move yet, and we’re probably getting close to ready to look at something else, but we’re not going to be able to convert it about the same time we convert Mountain Commerce in November. So the answer to that is yes and no. I haven’t pushed hard, but we’ve been pushed a little bit ourselves. We’ve had people calling us outside of bankers, calling us directly outside investment bankers and saying, we met you, your company, two or three years ago and we wanted, we’re thinking about doing something. We wanted to talk to y’. All. That happened with a couple of, couple of, One Florida and one Tennessee came at us. So when we do that, we’ll have opportunity. We’re going over to see Bill and his team. We’ll have enough to talk to Bill when we get over. So we get over to Tennessee and see where we’re where we’re going and where we’re thinking. We’re looking, we’re looking. There’s a Tennessee deal out there. There’s a Florida deal out there. So we’ll see how they. How they work out. Yep. Okay. I guess it’s somewhat related, but how do you feel about being more aggressive on the repurchase plan? Do you have an optimal capital level in your mind or you just kind of warehousing this capital for future acquisitions? Because it’s obviously 13% TCE and CET 1 to 17. Those are high levels. I don’t. I don’t know if we can spend it as fast we’re making it, so that’s a pretty good position to be in. But, I mean, we made $118 million. Pretty nice, right? Pretty sweet. Yep. I don’t know. You know, we got so much capital right now that we really like our position and. But I’m ready to buy stock. I mean, I’m looking at it today. We can’t buy today. Damn it. Tomorrow. Tomorrow. We can’t. We can’t today. So, you know, it gives us an opportunity and it’s. It’s fine. I want to buy back all the Mountain Commerce. It’s about five and a half million shares. I want to buy that back. I think we bought essentially all the happy back. So I want to buy all the Mountain Commerce back. Just kind of go out there. We can do it. We can do it pretty quick with the capital position we’re in and wouldn’t take us long to get that done. I like to buy it. You know, I know it’s a little diluted to us, but I like to buy the stock, so. Yeah, okay. See, it’s not an either or in your mind. You can do. You can do both. Yep. Yep. That’s good. Not. Not either or. You can do both, I guess, is what you’re saying, right? That’s correct. That’s correct. Okay, thanks. Yep. Thanks for the help. Appreciate. We just keep stacking up capital.
OPERATOR
We now turn to Matt Olney with Stevens. Your line is open. Please go ahead.
Matt Olney
Thanks for taking the question, guys. Just sticking with M and A. You mentioned some potential bank targets in Florida and Tennessee.
John Allison (Chairman)
Can you just speak to the appetite of doing M and A in footprint in existing markets versus expanding into new markets? Is the bar set higher if you were to expand the franchise into new markets? Just trying to appreciate how you think about doing M and A, an existing footprint versus versus something outside the existing footprint? Well, there’s no comparison to me if there’s a Florida deal out there that we can do, you know, we can. We got management from Key West, Florida, Pensacola. We got management all over the state of Florida and we can just add it to someone. You’ve heard me talk about strengthening one of those guys buckets. I mean, they’re great managers. I mean, the performance of our Florida operations, outstanding. Well, all operations are outstanding. But those guys know what to do and how to do it. And it just makes it simpler and easier. We go, we made the big move to Tennessee because we like Bill and his team and we made that move. So we need to, we need to grow there. We need to build that and muscle up Tennessee because I think there’s opportunities in Tennessee, a little disruption over there, and I think it’ll give us an opportunity to pick up and build some muscle in that state as we’ve done in Florida. And I think it’s an opportunity for us. So the reason being you just get more consolidation savings. You know, that’s really the key. If you think about closing branches and doing a deal where you can close some branches, those are big savings. So we’ll continue to focus more on where we are than outside of that. When we look outside of that. One of those deals that I’m talking about that your bankers call me about, he’s outside of that. And I really like the operator and we like the guy. We like his, we like his company, we like what he does. They don’t have the growth that a Florida’s got, but he runs a good clean operation. So someone said, why would you go there? And I said, because it’s simple and it’s clean and they do a good job running their company. So it kind of builds. Now that’s outside of where we, where we presently operate today. He’s a guy that runs it and you don’t have to hold his hand. So that’s really what you’re looking for. You look for somebody. If you’re going outside the market, you better get somebody like Bill that knows what they’re doing and knows how to run one. Yeah, okay.
Matt Olney
Appreciate the commentary. And then just as a follow up, if Chris is still on the line, I got a question about private credit. And Chris, you had some good insightful comments about private credit and kind of
Chris Poulton (President of CCFG)
what you had there a few years ago versus what you have today. I want to dig more into the views you have today and kind of your outlook here. I think you said that the current bias was for further reduction of the remaining private credit exposure. That you have. I was hoping you could expand on this. And how do you see the private credit market playing out the next few years? And also curious, when do you expect to see some opportunity here for, for growth for tcfg? Yeah, thanks, Matt. Yeah, probably two things there. One, you know, right now, the uncertainty here is what’s the underlying, you know, what are these underlying loans look like and where do they go? It feels early because I think you’re going to see a little bit of a false bottom where, you know, there’s a little bit of maybe some price expansion or there’s a little bit of some markdowns in these notes. Everybody goes, okay, that’s it. And then, you know, there’s always, as they say, the third shoe to drop. Right. So I, right now we’re not seeing a lot of capitulation on the price side and there should be, but we’re also not seeing any activity. You know, nobody’s pricing a new facility today if, if they don’t have to. So I think we’d want to see, you know, one of the things we look at a lot in ours is we’ll have these loans been marked appropriately. Right. You know, what’s happened to the, what’s happening to the underlying credit? Have you had EBITDA expansion or not? Has the loan been marked, et cetera? We’d like to see a little more of that before I think we get comfortable. I mean, we’ve certainly had people, you know, come to us and say, you know, I’d like to get out of some of our positions. My risk guys are getting on to me, what would the price be? And I think right now our answer is, you know, price doesn’t fix credit. And so, you know, an additional 50 basis points isn’t going to save me when, you know, when I need, when I need the credit support. So I think right now we’re just biased towards, let’s figure this credit thing out. This may turn into nothing, right? I mean, it may turn out all these, all these things are fine. AI does not disrupt industries and all these software companies are fine. I just don’t think you should take that risk today. So we’d want to see a little bit more capitulation. I think before we would, before we would do that. But we, you know, as I said, we’ve been in this market for, you know, 10 plus years, so I think people that came into the market, quite frankly, need to take some losses before I feel comfortable. Right. It seems like that’s how you get discipline is you get new entrants in and they thought they were getting something very risk free and they priced it that way and then it turned out not to be. And then everybody gets religion again. So we’ll look for that. And when we see signs for that, we might, we might consider, you know, expansion again. We’re still set up that we have facilities that will roll off. And right now if, if a facility rolls off, we probably just wouldn’t replace it. We wouldn’t go into the next one or we just take the payoff and move on. That’s on the CNI side. Real estate. We’re, we continue to see good, good pipeline growth. We are going to have elevated payoffs. But you know, one of those is just a credit. We’ve had that I’ve been saying we’ve been two weeks from payoff for six months and I think it’s paying off today. We’ll find out. Not, not a worry for us on the credit. They’ve just been in the sale process and it’s just dragged on a little bit. But we like the credit. I’d like it to stay longer, but I get nervous when things stay a little too long. Right. Stuff supposed to move. We’re in the moving business and so. But we continue to see great opportunities. I think our pipeline’s pretty strong. It might take me more than a quarter to replace what comes off, but it won’t take a lot more than that, I don’t think.
Matt Olney
Okay, that’s helpful, Chris. Always appreciate your insight. That’s all for me guys. Thank you.
OPERATOR
Thank you.
Brian Martin
We now turn to Brian Martin with Brin Capital. Your line is open. Please go ahead. Hey guys, just maybe one follow up. Chris, if you’re still there, just on your outlook for the year. I know you talked about a payoff last quarter. Sounds like that maybe got pushed back a little bit. But just your kind of outlook for growth is still kind of mid single digit type of growth this year. Kind of with the puts and takes of the payoffs and the pipeline you’ve got.
Chris Poulton (President of CCFG)
I think that’s right. That’s what I’d like to see. I think if we don’t have that, I’d be a little disappointed. We really look at it on more like a rolling basis. Right. So which I know is harder for you because you look at it on a, on a calendar basis. But you know, I’d say from here over the next, you know, rolling 12 months, will we grow? I think so. Based on what we see. We, we booked you Know quite a bit last year. We had really good production last year, not all that’s funded. So we would expect some of that to roll through. And I do like where we are right now on Pipeline. I’d say there are, Kevin talked about a little bit. You know, we’re in constant contact with our customers. Most of our businesses repeat business, whether it’s, you know, somebody borrowed from me three years ago or some of the borrowed from me last year. So we’re really always kind of early on in discussions with our customers about what they’re buying, what they’re planning, what they’re doing. Some of that moves around. And then I was talking to somebody last week, they called me up, they said I’ve got this thing, we may be born buying it, we’d want to move quick. Etc. Would you be. Where would you be? We told them, they said that sounds great. Then they called me, you know, yesterday and said I think we’re going to pass on that. And so I would have told you last week there might be pretty interesting deal there. And you know, today there isn’t but they may call me back on Monday and say it’s back on. So we’re flexible. And because we’re flexible we get a lot of looks at things. And so generally speaking, you know, on a rolling kind of 3, 4/4 basis, I can usually say yeah, I think we’re probably going to expand.
John Allison (Chairman)
Got it. Okay, perfectly. That’s helpful. Thanks Chris. And maybe just a couple follow ups for me. Johnny, I think you talked about the M and A, just not to beat a dead horse, but just any change now that you’ve gotten Mountain Commerce in terms of sizing? You know, a lot of people are asking, do you look at something smaller, bigger? Is it just what’s available? Just any, any context on kind of what your preference would be in terms of moving forward with M and A.
Brian Martin
Well, somewhere in the size or larger than maybe Mountain Commerce would be nice, but we would probably do a smaller deal if it fits Bill, you know, if it’s in a market to where Bill’s not. If it fits, we probably would step down and do a smaller train. Tennessee’s pretty good sized state. You know, we’re in what, four or five locations? Six, seven, eight. And we got room to grow in that state. Gotcha. Okay, that’s helpful. And maybe just Stephen, just on the margin, I think you talked about the opportunity on the, on the cost of deposits, Mountain Commerce has still got some room, maybe not as much room on legacy, but on the asset Side what’s the opportunity for what’s remaining to be repriced this year for home and then I guess any impact of consequence from Mountain Commerce in terms of that repricing on the asset side?
Stephen Tipton (Chief Executive Officer of Centennial Bank)
No, I don’t think any impact necessarily from Mountain Commerce. You know I would say you know what we’re seeing you know here most recently on what’s maturing as we go given where competition’s at is you know essentially trying to you know kind of blend in with with overall where it’s maturing, maturing from to keep it on the book. So yeah, the benefit that you know, I think maybe banks thought was there a year ago, you’re certainly with what we’re seeing loan pricing competition in other areas, I think it’s kind of hold on to what you got.
Brian Martin
Gotcha. Okay. And just then maybe in terms of you gave the. I think someone gave the payoffs maybe it was I guess. But in terms of the production, I think you said it was around 900 million this quarter. I guess what this recent quarters is production been similar at that level or is that that moved around a little bit?
Stephen Tipton (Chief Executive Officer of Centennial Bank)
It’s a little light for. Yeah the 9:17 for this quarter, you know we were to a little over 2 billion in Q4 but you know seasonally usually are at the end of the year. But you know prior quarters in that we’ve been a little north of a billion.
Brian Martin
Okay. So this quarter. Yeah, somebody similar is not funding day one. Some of that’s a good, you know, fair portion. That’s construction and that’s not going to fund until you know, six months from now when it’ll start funding generally. So that’s a little hard to pencil out on time. Okay, I hear you. And maybe just the last last couple for me, I think just in terms of the credit quality, I mean I guess the one credit, the Texas one you’ve talked about, but the other couple credits that are out there, I think the Dallas Fort Worth one, the boat one I guess I guess is there. Those are still just being worked through and you know no, no real update in terms of, you know how the timing may proceed there. Just trying to get a read on when you see some of the improvement that you expect here, you know, kind of flowing through the numbers, you know as we go through the remainder of the year.
John Allison (Chairman)
We battle those credits every day. That damn vote we’re going to a jury, I mean to a set for trial in June. So we have not. It’s been a year we’ve had. We’ve had it. We have the boat. We have the boat. We have the boat. Not a question of where it is. We actually have the boat. We just can’t. I mean, absolutely. They’re just keep. It keeps going to judge. And then they got a new judge now we got a new judge, third judge, and we’re going before the judge in a, a trial now. I just, I mean, it’s $5 million boat. It’s $5 million owed on the boat. It’s a 7, 8, 9 million dollars. It may be a 3 million by the time we get it sold. It may be so damn old. I, I’ve never seen anything quite like that deal at all. It’s just been frustrating that the, the apartments in Dallas that we’re wrestling with. We keep, we keep. We’ll get it sold eventually at some point in time. We’ve had five or six, seven buyers on it. We’ll get it sold at some point in time. But it’s, I mean, we’ve marked. Yeah, it’s got a. There’s no loss in that for us. I mean, we and Kevin collected a couple million dollars on it a while back, so there’s no loss in that. So just a matter of getting it out of there. There was some construction problems and anyway, you can’t.
Kevin Hester (President and Chief Lending Officer)
Yeah, we got to get it’s. It’s in a receiver and the receivers got to correct some safety issues before we may find somebody to take it where it’s at. We’re working and we talk to people all the time and work through all the leads we got. But realistically, we may have to work through the issues that need to be completed before you find somebody that really. There’s an opportunity there if somebody wants to jump in and, and do it. If you find the right person, then we’ll get it. We’ll get it sold and moved. And like I said, some of the challenges just have to work through, but there’s no loss in it at all. We’re written it down, down, down, down. Okay. And just the outlook on charge offs. I mean, it sounds like that’s a pretty de minimis number, pretty low number here given, you know, what, what’s happened with, you know, these credits are just something you’re working with through. We’ve kind of absorbed the impact. So the charge off outlook, at least near term, is still pretty benign. In terms of the portfolio today. I would agree with that.
John Allison (Chairman)
Okay. And maybe the last one for Brian. Go ahead, Johnny. I’m sorry, I don’t anticipate any more losses on the big credit or the apartment credit. That’s really the ones we’re working through. So I don’t anticipate if they’re marked, they’re marked and written down. And if there was, I mean, if the 100 million dollar credit, if there was some loss in it, I’d be shocked. But. And I’ve been, I’ve been fooled before, but I, I think we’re fine. It’d just be a bump in the road for us because, I mean, we
Kevin Hester (President and Chief Lending Officer)
got the PPNR and you’ve got reserves. Yeah, maybe. I don’t know, maybe it’s nothing. I don’t think if I thought there’s loss in it, you know, maybe if I thought there’s loss in it, I’d take it. I would have immediately written it down. But we haven’t, no need to write it down at this point. 15 years of charge offs in our. We got 15 years worth of charge offs in our reserve. Did you hear? Yes, we’ve got 15 years charge offs in reserve right now. So, I mean, we have a pretty good history of not having a lot of charge offs that we’ve had for a year. We had the Texas cleanup, which was probably the biggest one that includes that. And maybe just the last one for me. Brian, I think you talked about the fee income being, you know, just kind of some of the noise the last couple quarters this quarter seemed pretty clean, around 44 million. Any is that kind of a decent level to think about as we go forward? And then I know you talked about a couple of maybe get some wind at your back, but, you know, at least a baseline that seems pretty clean with absent all kind of the noise that’s kind of flowed through there in recent quarters. Yeah, I mean, you’re right because over the last four quarters we’ve had somewhere between four and five million dollars every quarter that’s dropped down in this other income line item. And it’s a whole variety of different events, ranging from 5.7 million in the third quarter of last year to 3.9 million in the first quarter of last year. But this quarter we didn’t have any of that. Right. Okay. So it’s a good baseline to work off of. And then, you know, expectation is hoping that you see a trend upward.
Brian Davis (Chief Financial Officer)
So. Okay, perfect. Congrats on the quarter and thanks for taking the question, guys. I appreciate it. Appreciate you. Thank you.
OPERATOR
We have no further questions. I’ll hand back to Mr. Allison for any final comments.
John Allison (Chairman)
Yeah, thanks. Been a long day. A lot of questions, a lot of interest. Thank you for your support. We’ll continue to do our part, and hopefully we’ll continue to run the 2% ROA. And see, they beat us up a little bit on the stock today. They’ve kind of hammered us on the stock. So I don’t think we deserve to be off 3%. But it’s an opportunity to buy, so good bet. It’s a great opportunity to buy. So time, timing be good for us. And that’s it. Unless anybody’s got anything else. Anybody else got anything? Thank you very much. Talk to you 90 days.
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